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Monday, August 13, 2012

An Interesting Look at #Economics and #Inequality

This is a re-post of a piece from Facebook by Nancy CM that describes the history of modern economics and conservative ideology that has caused depression after depression.
The lower the one is on the income ladder, individuals has less ability to access services and goods to keep them in good health, and in their best interests. The modern day governments are supposedly there to provide the polices that would mitigate the inequities cause by access and other factors that prevents the person to act in their best interests, their welfare and to provide for their family. There is great inequality across the globe in 2012, and which is no surprise to anyone reading this, but what is never discussed is the stubbornness of the political and economic powers who still have not learned their lessons from the Long Depression of 1873.

Just keep in mind the historical context and the outcomes of society of the average persons. " Furthermore, real per-capita income either stayed approximately constant (1873–1880; 1883–1885) or rose (1881–1882; 1886–1896), so that the average consumer appears to have been considerably better off at the end of the "depression" than before. Studies of other countries where prices also tumbled, including the US, Germany, France, and Italy, reported more markedly positive trends in both nominal and real per-capita income figures. Profits generally were also not adversely affected by deflation, although they declined (particularly in Britain) in industries that were struggling against superior, foreign competition. Furthermore, some economists argue that a falling general price level is not inherently harmful to an economy and cite the economic growth of the period as evidence of this.[47] As economist Murray Rothbard has stated:

"Unfortunately, most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era. For they have overlooked the fact that in the natural course of events, when government and the banking system do not increase the money supply very rapidly, freemarket capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers."[47]

Accompanying the overall growth in real prosperity was a marked shift in consumption from necessities to luxuries: by 1885, "more houses were being built, twice as much tea was being consumed, and even the working classes were eating imported meat, oranges, and dairy produce in quantities unprecedented". The change in working class incomes and tastes was symbolized by "the spectacular development of the department store and the chain store".
"Prices certainly fell, but almost every other index of economic activity - output of coal and pig iron, tonnage of ships built, consumption of raw wool and cotton, import and export figures, shipping entries and clearances, railway freight clearances, joint-stock company formations, trading profits, consumption per head of wheat, meat, tea, beer, and tobacco - all of these showed an upward trend."[48]"

The average Joe back in the late 1800s may not have had a lot of cash, but they still was able to provide for their families, especially in areas of rich natural resources such as minerals, forestry, fishery and agriculture. My point, considering the time and the era, income equality was pretty well distributed among the general society, that the individuals had access and the means to purchased goods and services to support their families without going into debt to do so.

The other side of the coin, are the political and economic powers of the time that brought profiteers making a fast buck, economic powers determined to put the average person in debt and cash poor, and the political powers determined to protect the economic powers against the actions and behaviours of the average person.

In 2012, one needs to understand the historical files of the working economic and political systems of the time, to truly understand the actions and behaviours of the Harper government, and their policies. If there is anything I am sure of, the political and economic powers throughout history has always acted and behaved at the expense of their citizens. The Long Depression, was the first global depression and many of the economic and political powers were determined to have the average person pay for the debt loads of the economic and political powers. It did not happen in the Long Depression, but each depression and recession since 1873, has successfully transferred the wealth from the average person, in exchange for the debts of the political and economic powers, in so many different ways.

"Nobel laureate Joseph Stiglitz has written six books in the last 10 years warning of the dangers of extreme income polarization. The American economist’s latest wake-up call is his most urgent." His work is not only based on his expertise as a economists but as well it is based on historical fact. In fact, I believe the Harper government like other extreme right governments and others who hold unto ideologies from the extreme right, are determined as Joseph Stiglitz has stated over and over again, determined to created inequalities within inequalities by the political and economic policies based on extreme right ideologies. Stiglitz goes on to state in the Star article, "“Most Americans don’t think speculators should be taxed at a fraction of what people who work for a living pay,” he told Rolling Stone magazine. “They don’t think banks should be allowed to engage in predatory lending or abusive credit card practices. They don’t think drug companies should be allowed to get special benefits from the government.”

The reason they haven’t acted, he says, is that most still yearn to believe — despite the evidence — that anyone can succeed in America and many still accept the assurances of their mainstream economists that everyone gains when the rich get richer.

Stiglitz hopes The Price of Inequality will put those myths to rest. And he hopes readers will consider the “simple remedies” he offers."

On Stiglitz's blog, "A large literature in economics and political science has developed to explain this "resource curse", and civil-society groups (such as Revenue Watch and the Extractive Industries Transparency Initiative) have been established to try to counter it. Three of the curse's economic ingredients are well-known:"

The above describes the Harper Conservative government to a T. But I let the readers come to their own conclusions. Politicians always tells their average citizens that it is too complicated, especially the economics. Economics is relatively easy to understand, when one is given all the information against the historical backdrop for reference and understanding. In the Star article Stiglitz's states - "A growing band of intellectual heavyweights — Lawrence Lessig and Michael Sandel of Harvard University, Jacob Hacker at Yale, Paul Pierson at the University of California, Berkeley, Nouriel Roubini of New York University, to name a few — is echoing Stiglitz’s message.

But political leaders, bankers and business magnates are resolutely shutting their ears."

Right across the globe, and Stiglitz has concluded only two possible scenarios. "One is that the mega-rich 1 per cent of the population will realize it is in their own interest to reverse today’s extreme polarization of income. No one benefits from a less productive, less dynamic and less efficient economy.

The other is that the 99 per cent will realize they’ve been sold a bill of goods by their leaders and demand change in ways governments, political parties and employers cannot brush off.

People intuitively get it, he says. They just have to muster the political will to act."

Well I am on board, willing to do what it will take, to force governments and economic powers to reverse themselves. Living out in the middle of no where, the least I can do is to share my knowledge with others, and in the hope it will pass from one person to the next person. I believe all the Western democracies are at a crossroads, and in particular Canada. The Harper government can and probably will continue to ignore the inequalities caused by hard-right ideology and policies that keeps all Canadians financing their budgets on credit. In other words, obtaining the basics and the nice to have stuff in the 21st century is all finance on credit. No credit, too bad you can always go to the food bank, or surf on the many couches of your friends, until you can afford a place of your own. A bit dramatic, but I believe that most Canadians have reach their threshold knowing that the governments of all levels in Canada have sold a bill of goods to their citizens.

What gives me hope and further evidence is another article called, "Harper's pipeline dilemma: can't reject, can't ram through"

I always read the comments, and the Harper trolls are having a hard time to do their damage, because people are finally waking up. One comment struck me, heart felt and the Harper government has not seen anything when 10,000 people of aged 55 and over are standing together out in the middle of no where to block the Enbridge pipeline.

"Dear Canadians: There are very few issues in my life time, (67 years), that I have felt so strong against. The pipe line is one of them. I am ready to be called to stand firmly before the machinery that Harper thinks he may have in store for us. No pipe line, no Burrard inlet oil tankers, on our shores. This is Canada, a part of North America, we should be taking cared or our people not that corporations. This province , coast, must not be scared by a pipeline running through it. I would love for other Canadians across this country to publicly commit themselves on this sight against this obscene environmental assault, so that when I get arrested I can feel justified by my action of protest but best be assured that I will still be standing in front of their machines with plenty of people."

Once anyone reads the science of bitumen, the environmental destruction to the land and waters, the false truths of the big oil and governments, the actions of the politicians and compared it to your personal knowledge and realities of your life that represents the truth - you might just conclude far right ideology that pretends to sit in the middle of the political spectrum is bad for your welfare and health. Than go back and study Stiglitz, and start asking questions to politicians that are currying for your vote.